Heineken offers compromise to preserve £400m Punch deal

The competition watchdog is to consider whether proposals offered by Heineken over the proposed acquisition of part of Burton-upon-Trent pubco, Punch Taverns address competition concerns and remove the need for an in-depth investigation.

Earlier this month, the Competition and Markets Authority (CMA) said that Heineken’s proposed £400m purchase of part of the Punch Tavern estate could reduce competition in 33 local areas across the UK.

Before the merger was referred for a further in-depth investigation, the companies were given the opportunity to offer proposals to address the concerns.

Heineken has now offered to sell pubs in each of the affected areas to preserve competition and ensure customers in these locations do not lose out.

The CMA has decided there are reasonable grounds for believing these proposals, or a modified version of them, might remedy the competition concerns it has identified.

As part of an initial investigation, the CMA looked in detail at areas where pubs operated by Heineken and Punch currently compete. It identified 33 local areas where their pubs would not face sufficient competition after the merger, which could lead to price increases or a deterioration in the quality of the service on offer.

The CMA has until August 22, 2017 to consider whether to accept the undertakings, although it may decide to extend this deadline to October 17, 2017 if it decides there are special reasons for doing so.

As part of its process, the CMA will undertake a public consultation.

If the CMA does not accept the undertakings proposed, the merger will be referred for an in-depth investigation.

A spokesperson for Heineken said: “We welcome confirmation from the CMA that only a small number of pubs are required to be sold. It’s a sensible outcome and good news for pub-goers across the UK who will see the benefit of well invested pubs in their communities.”

Punch shareholders approved the sale of the group to Vine Acquisitions in February on the basis of an offer of 180 pence per share, a price which values the business at £402.7m.

Heineken and Patron Capital, using Vine Acquisitions as an SPV, have agreed the deal, which will see them acquire the entire and to be issued share capital of the Staffordshire company.

Immediately on completion of the deal, Heineken was set to acquire from Patron a portfolio of around 1,900 Punch pubs with Patron retaining an additional 1,329 which it would run itself.

 

 

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